Watergate Office Sells for $52M as Elme Exits Sector

One of Washington, D.C.’s most recognizable office properties traded hands at a steep discount.

Elme Communities sold Watergate 600, a 309,000-square-foot office building that’s part of the famed Watergate complex, for $52.5 million, or about $170 per square foot, Bisnow reported. The buyer was local family office Jetset Hospitality, according to filings with the D.C. recorder of deeds.

The semicircular building located beside the Potomac River is roughly 80 percent leased; about 125,000 square feet are available across four contiguous floors, according to Stream Realty managing director Matt Pacinelli, who represented Jetset in the acquisition. Stream has been tapped to lease and manage the property.

The sale underscores the sharp repricing many office assets have faced since the pandemic. Elme’s predecessor, WashREIT, bought the building for $135 million in 2017, meaning the latest trade represents a roughly 60 percent drop in value over nine years.

Jetset financed the purchase with a $28.5 million loan from Symetra Life Insurance Company, deed records show. Only about half of that amount — $13.8 million — went toward the acquisition, while the remaining $14.7 million was earmarked for future construction, including building upgrades and tenant improvements.

The purchase was structured as a 1031 exchange, allowing the buyer to defer capital gains taxes by reinvesting proceeds from another property sale. Jetset recently sold a 50,000-square-foot office building at 25 E Street NW to the District of Columbia, which is operating the property as a homeless shelter.

Jetset, led by Fabrice Souchaud, has historically focused on hospitality investments. The firm owns the Windsor Inn Hotel and the Dupont Circle Embassy Inn in the District, both early 20th-century boutique hotels it acquired in 2009.

The Watergate purchase marks a move into office at a moment when distressed pricing is drawing opportunistic buyers.

For Elme, the sale closes the book on office ownership altogether. The Bethesda-based real estate investment trust rebranded in 2022 and spent the past several years unloading roughly $1 billion in office and retail properties to pivot toward multifamily.

Last year, the company agreed to sell most of its apartment portfolio — 19 properties — to Atlanta-based Cortland for $1.6 billion in cash as part of a broader liquidation plan.

Watergate 600 sits across the complex from the office building where operatives broke into the Democratic National Committee headquarters in 1972. That building, 2600 Virginia Avenue NW, sold in 2019 for $101.5 million to investor Brian Friedman.

— Holden Walter-Warner